Tag Archives: Metagame

Studying a Higher Timeframe Trap

 

There are some common themes that run through the articles I produce at YTC. One of these, which has been here since the beginning, is the importance of creating a Market Structure & Price Action Journal.

Every day, find something that amazes you in the charts. Print it out. Cover it with notes. Study it. File it. And review your journal often. It really will be the greatest trading book… EVER!

Over time, I promise you will start to see patterns within the market structure or price action, which repeat themselves again and again and again.

Like this, which we shared via social media way back in 2015:

What doesn't happen... is important information! 

This is a structural feature that I see repeated again and again and again.

Here's another previous example – http://yourtradingcoach.com/trading-process-and-strategy/trading-failed-expectations/

And of course, those with the YTC Price Action Trader should look to Volume 2, Chapter 3, Page 143.

But let's look to an example which occurred last week, on a higher timeframe chart.

Yes… it's an idea which you will find in all markets and all timeframes!

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Happy trapping,

Lance Beggs

 


 

A BOF Trade with Many YTC Concepts

 

Let's look over a trade I particularly like, from earlier this week.

It's nothing special in terms of returns. But it took an otherwise dull session from breakeven into profits.

And it displays many of the concepts that we have discussed here in the newsletter over the last few years.

So I particularly like this one. And I thought it's a good one to share to reinforce some of these key lessons.

The trade is a Breakout Failure trade following price interaction with the Prior Day's High resistance.

Breakout Failure Review 

Let's see what I liked about this trade…

Breakout Failure Review

Breakout Failure Review

Breakout Failure Review

Breakout Failure Review

Breakout Failure Review

Breakout Failure Review 

Let's see the outcome…

Breakout Failure Review

Breakout Failure Review 

Happy trading,

Lance Beggs

 


 

“But it’s scary!” “What if it fails?”

 

I received some interesting comments about a trade in a recent article – http://yourtradingcoach.com/trading-business/the-good-the-bad-and-the-ugly/

Here's an image from the article, showing the entry SHORT against a single wide-range bullish candle.

Single candle pullback

Review the original article if you want to see the context behind the trade.

For now though, I want to discuss some concerns that a few people expressed. Because I imagine there are a whole lot more who felt the same thing.

The feedback was quite varied in nature.

A couple of people really "got it". They understood that while the candle appears to show great bullish strength, the internal movement didn't necessarily suggest that was the case.

But many more expressed concern, either commenting on the post or via email. Some short extracts:

  • "I don't understand, how you are comfortable to take up the 2nd setup"
  • "But it's scary."
  • "What if it fails?"

 

I get it!

Here's the thing…

YES…

It is scary if all you see is the strong bullish candle.

BUT…

It's in a good contextual location. It has a good R:R. And I don't just place a limit order and let it get overrun. I'm watching and waiting to see some inability to continue further before placing the entry order.

SOME IMPORTANT POINTS:

  • These are some of the toughest trades that I do take (from a psychological perspective).
  • They're simple in concept. But they are not easy.
  • They're not for new traders.
  • If you're not comfortable with them, don't take them. Stick to the easier ones. But learn from them. Maybe take note of them when you do see them and then study them post-session. As you gain experience it might be something you one day add to your game plan.
  • Again… let me reinforce the last point. You don't have to trade these if your skill level is not ready for them. There are much easier setups available.

 

I went looking for something similar over the last fortnight, so that we could work through another example. But there hasn't really been a great example since then.

But then I thought maybe this one will help.

The context is different. But the fear is much the same.

Whenever I've posted these type of trades in the past I tend to get much the same feedback – "There is no way you can enter here!", "You're stepping in front of a freight train!", "It's too scary!", "But what if it fails?"

One other thing I like about this example is that it slows the process down, with the end of the pullback occurring over 3 candles. This might make things a little easier to see.

So anyway… here it is…

But it's scary! What if it fails?

But it's scary! What if it fails?

But it's scary! What if it fails?

But it's scary! What if it fails?

But it's scary! What if it fails?

But it's scary! What if it fails?

But it's scary! What if it fails?

As we discussed here in these articles, until I see evidence of the break lower holding these levels, I'm expecting a break like this to fail.

 

It's a simple shift in mindset that makes these traps easier to enter.

Of course, it's never completely comfortable.

The move down to the level does display some bearish strength. And as readers of my ebook series will note, I'm not a fan of fading strength.

But in the case of a break of a level like this, at the end of a long move, it's the behaviour of price AFTER THE BREAK that really matters.

Will price show continued bearish strength and drop like a ton of bricks? Or will it stall and then break back higher?

As I noted earlier, I do NOT just place a limit order in a situation such as this and hope that it all works out ok.

I watch. I wait. And if I see evidence that the selling is perhaps all done, only then will I consider entry.

Let's move forward and see what happens.

But it's scary! What if it fails?

But it's scary! What if it fails?

Here's the outcome:    (clearly underperforming when you see the TTF eventually break to new highs… but still it's a good trade!)

But it's scary! What if it fails?

I mentioned earlier…

It's in a good contextual location. It has a good R:R. And I don't just place a limit order and let it get overrun. I'm watching and waiting to see some inability to continue further before placing the entry order.

This applied with the trade two weeks ago.

And it applied with today's trade.

This is what gives me confidence to enter.

And if it fails?

So what? It's one trade.

If it loses, I'll keep the loss small.

This is not a game of certainty. The market environment is uncertain. Some trades will win. Some will lose. Work to keep the average loss smaller than the average win.

But it's scary! What if it fails?

Let's wrap up…

Yes, it's hard to enter against a break. Or against a strong single candle pullback.

If you're not comfortable with this, stand aside and wait for something easier. But observe them. Make decisions as you watch them live. And take notes. Study them post-session. As you gain confidence, you might want to consider sim trading a few. And eventually trying them live (small size).

But if it's in a good contextual location. And if the R:R is acceptable. Then watch. And wait. And if price shows that it's given all it's got, and appears unable to move any further in the pullback direction, then take the trade.

Manage it.

Keep the losses tight. And if it wins, then squeeze it for all the profits you can get.

Happy trading,

Lance Beggs

 


 

The Other Trader (4)

 

Let's continue with the metagame concepts discussed in recent months.

Here – The Other Trader
Here – The Other Trader (2)
Here – The Other Trader (3)
Here – Metagame Trading

And of course based upon concepts from here: YTC Price Action Trader

Here is the basic idea…

If I can't feel someone on the other side of the market getting it really wrong, there is no trade.

Here's how we do it.

 

1

Identify a potential trap

 

Identify a potential trap

Identify a potential trap

Identify a potential trap

Identify a potential trap

Identify a potential trap

 

1

Feel the pain

 

Feel the pain

Feel the pain

Feel the pain

 

1

Spring the trap

 

Spring the trap

For those with the YTC Price Action Trader:

  • Setup – See Volume 3, Chapter 4, Pages 28 to 31
  • Entry trigger – See Volume 3, Chapter 4, Page 87, Figure 4.63 (third entry in the table)

 

If you're not achieving the results you wish to achieve, consider placing more thought towards who is on the other side of your trade.

It may be the paradigm shift you're seeking to take your trading to new levels.

Happy trading,

Lance Beggs

 


 

Wait till the Reversal Trader is Trapped

 

I am quite a fan of Al Brooks' first book, "Reading Price Charts Bar by Bar", despite the fact that we trade very differently.

Out of close to 400 pages, there is the one idea which has stuck with me more than any other. From page 384:

"Countertrend setups in strong trends almost always fail and become great With Trend setups…"

The idea is simple.

In a strong trend you will find all manner of reasons to suspect that the trend is ready for reversal. And you'll find yourself easily tempted to enter counter-trend.

But more often than not, it's a trap.

When you feel this strong desire to trade counter-trend, do NOT trade. Be comforted by the fact that others will notice it as well. And that they'll enter.

Then watch their position, waiting patiently until they're trapped.

The failure of their counter-trend position will often provide a great entry for you, back in the with-trend direction.

Those who trade the YTC Price Action Trader methodology will be very familiar with this concept – timing our entry off the failure of "the other trader".

This concept came to mind on Tuesday, as I felt a strong desire to enter counter-trend against a strong bearish trend in NQ.

Let's look at the charts.

Don't fade a strong trend... wait for the trap and enter with-trend.

Don't fade a strong trend... wait for the trap and enter with-trend.

Don't fade a strong trend... wait for the trap and enter with-trend.

Don't fade a strong trend... wait for the trap and enter with-trend.

Don't fade a strong trend... wait for the trap and enter with-trend.

Don't fade a strong trend... wait for the trap and enter with-trend.

Don't fade a strong trend... wait for the trap and enter with-trend.

Don't fade a strong trend... wait for the trap and enter with-trend.

Don't fade a strong trend... wait for the trap and enter with-trend.

Don't fade a strong trend... wait for the trap and enter with-trend.

Actually, I'm not happy with the exit decisions. But that's something for me to explore in my trade review process.

In terms of setup and entry… I love this one.

"Countertrend setups in strong trends almost always fail and become great With Trend setups…"

Keep this in mind next time the price bars scream out for you to fade a strong trend.

Is it actually a trap?

And is better opportunity perhaps available if you stand aside and wait for the "other traders" to be caught?

Happy trading,

Lance Beggs

 


 

Where Price Can’t Go

 

I'm always VERY interested in these places on the chart – the places where price can't go. The places where it tries… it pushes… but it just can't go there.

This is opportunity.

Let's start with the Higher Timeframe chart…

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Let's switch now to the trading timeframe… 

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Reference… this is a BOF Setup as described in YTC Price Action Trader Volume 3, page 28.

Happy trading,

Lance Beggs

 


 

The Other Trader (3)

 

In recent months we looked at a number of metagame examples – trading at places where the "the other trader" feels extreme stress or fear.

You'll find some of these articles, if you missed them, here, here and here.

Today, I thought we could look at another one. Because I just LOVE these setups.

You might recall this general concept from prior articles:

Trading based upon feeling the stress and fear of "the other trader"

Things don't always go according to plan though.

Trading based upon feeling the stress and fear of "the other trader"

If you missed the entry… no problems.

Let it go. It wasn't yours to catch.

There will be MANY other trade opportunities. Stay focused.

In fact… sometimes that next opportunity comes along VERY quickly.

Trading based upon feeling the stress and fear of "the other trader"

Trading based upon feeling the stress and fear of "the other trader"

Let's look at an example, a BOF setup on break of the high of day.

We'll start with the higher timeframe chart to get some context. And then move on to the trading timeframe and lower timeframe charts to discuss the trade opportunity.

Trading based upon feeling the stress and fear of "the other trader"

Trading based upon feeling the stress and fear of "the other trader"

(more…)

The Other Trader (2)

 

As price moves into my setup areas, "the other trader" is always at the forefront of my mind.

Who created this recent move against market bias? Are they trapped? Are they feeling stress? Where is the point of extreme stress at which they'll bail out of their position?

If I can't feel someone on the other side of the market getting it really wrong, there is no trade.

In recent weeks we've looked at some examples which include a break of a key level, which then stalls and fails.

The other trader - trapped on a break of a level

You can see these recent articles here:

http://yourtradingcoach.com/trading-process-and-strategy/the-other-trader/

http://yourtradingcoach.com/trading-process-and-strategy/metagame-trading/

These type of trap scenarios provide some of my favourite trade entries.

The other trader - trapped on a break of a level

But we don't always need a break of a level in order to find trade opportunity.

What we're looking for is a move, against market bias, into a REALLY LOW PROBABILITY place to trade.

Like this, for example:

The other trader - trapped on a move into an area of prior congestion

Reality is never as nice as these "text book" line diagrams though.

So let's look at a real-world example.

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